The Austrian banking group Raiffeisenbank International with its subsidiaries Priorbank and Raiffeisen Leasing will allocate 15 million euros to update the vehicle fleet of the Belarusian carriers. The investment project will facilitate the rapid transfer of the cargo fleet in the country to Euro-5 and Euro-6 environmental class vehicles.
The one year-project will attract up to 15 million euros to the Belarusian economy. The funds will be used to update the truck fleet of the Belarusian carriers. Transport companies will be able to purchase more than 150 modern Euro-6 trucks. Funding will be available on favorable terms: a five-year lease at 8.5% per annum in euro.
“The Austrian bank is considering leasing as one of the strategic directions of development in Europe,” said Vadim Matyushkin, Deputy Chairman of the Board of Priorbank. “Priorbank as the only private bank with Western European capital in Belarus plays the role of a reference level for foreign investors in entering the Belarusian market. Since 2003 we have attracted more than 4.5 billion euros of foreign investments into the Belarusian economy, with more than 320 mln. euros with Raiffeisen Leasing".
Raiffeisen-Leasing (Belarus) is a subsidiary of Raiffeisen-Leasing International (Austria) and it was established in Belarus in 2005. The company is among the top three in the country in terms of the amount of provided services. According to the rating results compiled annually by the Association of Lessors of Belarus, the company acts as one of the most successful on the Belarusian market.
In the West lease financing is extremely popular now. Moreover, Raiffeisen International is a leader on the markets of Central and Eastern Europe and includes 17 subsidiaries throughout the region. The decision to provide funding to Belarus was made by the group on the basis of the positive trends on the Belarusian market.
European companies are interested in entering the CIS countries markets. And Belarus is one of the priorities in this list due to its geographical location at the crossroads of transport corridors between East-West and North-South. In addition, the country has been actively involved in integration projects, such as "an economic belt of the Silk Road", which will contribute to more intensive development of the transport sector in the country in future,” says Michael Hackl, Managing Director of Raiffeisen-Leasing International (RLI). “Belarus demonstrates sustainable economic performance despite the economic turbulence of the neighboring countries during the last year. This gives foreign investors the logistics and transport sector in particular, confidence in project success on this market.”
Last year was a turning point for truckers — after several years of the stagnation caused by the decline in trade flows in the region, the market began to recover. According to the Association of International Road Carriers BAMAP, the export of services amounted to $ 900 million in 2016, and that is 5% higher than a year earlier. “We can observe stabilization of the market and improvement of business activity in the field of transportation. We expect export of transport services to return to the mark of $ 1 billion in the next few years,” said Natalia Vysotskaya, Deputy Director General of the Association.
According to her, ecological structure of the fleet has a particular importance. Now the amount of Euro-5 and Euro-6 trucks in the Belarusian fleet is 60%, but the Euro-6 vehicles accounts for only 2% (compared to 15-17% in the Baltic States).The competitiveness of the carriers in the European market will depend on the quality of the vehicle fleet.
“Transportation companies are experiencing a serious demand for a low-cost resource to purchase new cars.” All these years leasing was in high demand. Our profitability is now about 8%, while investment costs including amortization of own transport and accelerated depreciation for leasing reach 20%,” admitted Alexander Zenkevich, Deputy Director of the company Belmagistralavtotrans. “Baltic transportation companies have traditionally enjoyed leasing at low interest. We hope the Belarusian carriers will have this opportunity now.
The carriers will count on an increase in funding from the Austrian business and the reduction in interest rates to the European level in the future. And while Raiffeisen Group rates are the lowest on the market, they still inferior to those that are applied to European carriers for economic reasons in the domestic and foreign markets.
Maxim Lissitzky, Director of Raiffeisen-Leasing, affirmed that “the issue of the amortization and depreciation of existing fleet remains relevant for the carriers.” “Vehicle fleet renovation and their conformance with international standards help to avoid additional costs, particularly during transportation to the EU countries. We believe that the investment project of Raiffeisen Group will promote renovation and expansion of the fleet of the Belarusian carriers, which will improve their competitiveness and strengthen their position on foreign markets.”